Ok, CPI is just around the corner and folks are nervously eyeing the number although anecdotally, there’s nowhere near the level of anxiety we saw last month, when everyone was convinced that a hotter-than-expected read on inflation stateside could usher in the end times following the AHE-inspired February equity rout.
“FX, bonds and stocks are becalmed in a sea of mediocrity as traders jump at the shadows of what even a mild inflation beat might do,” Bloomberg’s Garfield Reynolds writes on Tuesday morning, before reminding you that “emerging-market assets in particular may be vulnerable to a surprise uptick.”
What’s interesting about the February CPI report is that it comes ahead of the March Fed meeting and ahead of Jerome Powell’s next real test as a market whisperer. His first test, on Capitol Hill late last month, received only mediocre reviews (the second day was ok, but the first day saw a hawkish surprise and that wasn’t great for markets). Since Powell’s testimony we’ve heard from other Fed speakers including, notably, stalwart dove Lael Brainard, who essentially parroted parts of Powell’s hawkish message at an event in New York last week, which would appear to underscore the notion that the committee is likely to hike more times this year than the market is pricing barring some kind of unforeseen circumstances.
So that’s the setup for the CPI print and although it doesn’t have the same billing this month as last, it’s still got people on edge. The dollar rebounded overnight ahead of the data gaining the most against the yen among its G-10 peers.
Futures are up marginally:
Meanwhile, some folks are still concerned about IG credit, which remains under pressure despite the recovery in stocks…
Oh, and finally, note this:
American small businesses: now with pricing power?
"Raised prices" and "plans to raise prices" subindexes tied for highest since '08. pic.twitter.com/xGFihwf6IO
— Luke Kawa (@LJKawa) March 13, 2018